2016 (3) TMI 130

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..... ed Compounded Levy Scheme for textile in terms of Rule 96 ZNA of the Central Excise Rules. Their application for the scheme was rejected later by the Commissioner on 9.8.2002. Thereafter , the appellants discharged duty under normal advalorem basis. During the period from 1.05.2001 to 9.8.2001, the total duty paid by the appellant in terms of Compounded Levy Scheme (provisionally) was much higher than the duty payable under normal advalorem levy. The appellants paid an excess duty of Rs. 1,38,14,885/- which was claimed as a refund and the same was granted to them. However, in June, 2006, the appellant were issued with a notice for imposition of penalty under Rule 25 read with para-9(5) (ii) of Notification no.32/2001-CE. The penalty was pro .....

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..... and examined the appeal records. 6. The only point for decision is sustainability of penalty imposed on the appellant under the above said Rules. The admitted facts of the case are that the application for the scheme was rejected by the Department and as such from the beginning (1.5.2001), the appellant is out of the scheme. During the pendency of their application, the Rule permitted payment of duty in terms of Compounded Levy Scheme on a provisional basis, which upon final decision of the Commissioner will be adjusted against the actual dues to be determined. It is also admitted that by following provisionally Compounded Scheme, the appellant paid excess amount of duty than what is payable in terms of normal advalorem levy. When the sche .....

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..... es of the Central Excise Act. The Rules dealt by the Hon'ble Supreme Court are similar to the one now under consideration. In Prime Exports - 2004 (167) ELT 313 (Tribunal-Delhi), the Tribunal held that imposition of penalty under Compounded Levy Scheme is not sustainable in the case where the availability of Scheme to the appellant was rejected by the Department. 8. Having considered carefully the above discussion and analysis, we find that in the present case, the penalty equal to the duty is not legally sustainable. When the application of the appellant for the scheme was rejected, it is clear that the appellants were not governed by the provisions of the Scheme. Invoking one of the provisions of the Scheme for imposing penalty is thus l .....

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